The research and ratings process progresses through four steps:

• Industry analysis to determine key issues for each sector
• Data collection from media, government and NGO sources, as well as company disclosure
• Final rating and analysis of company performance relative to sector peers
• Review and confirmation by a committee of senior analysts, to ensure the consistent quality of the IVA product

IVA analysis seeks to answer three key questions:

• What are the key ESG risks and opportunities applicable to each sector?
• Do companies have ESG risk management strategies commensurate with the ESG risks they face?
• Do companies have strategies to capture potential opportunities in the ESG space?

Data sources:

• Corporate documents: annual reports, environmental and social reports, securities filings, websites, and Carbon Disclosure Project responses
• Government data: central bank data, US Toxic Release Inventory, Comprehensive Environmental Response and Liability Information System (CERCLIS), RCRA Hazardous Waste Data Management System etc
• Popular, trade, and academic journals: accessed through websites, subscriptions, and searches of online databases such as Factiva and Nexis
• Relevant organizations and professionals: reports from and interviews with trade groups, industry experts, and nongovernmental organizations familiar with the companies’ operations and any related controversies
• Company Interviews: on an as-needed basis, our analysts also speak with company management following the preliminary company research and analysis to explore questions raised or left unanswered by that research. Companies are also permitted to view a text-only draft of their profile for fact-checking upon request

Company coverage and product delivery:

The MSCI ESG IVA product comprises company profiles, ratings, and scores and industry reports, updated annually. IVA ratings and profiles are designed to complement conventional analysis of companies’ financial performance, by providing an additional perspective based on sustainability factors. These IVA ratings provide information on a company’s positive or negative impact on the world as well as the company’s risk of internalizing that impact. The MSCI ESG IVA rating is also intended to be style-neutral and can be applied to either equity or bond portfolios. The coverage universe for the MSCI ESG IVA model is the MSCI World Index, with over 1,800 companies rated and analyzed in 35 sectors. In addition, information on controversial activities (determined relative to the UN’s Global Compact) is also available and covers a universe of 3,000+ companies, including over 1,200 emerging markets based firms. Basic revenue flow information on potentially screened activities, such as alcohol, tobacco or weapons production, is available on all listed equities worldwide.